Tuesday, February 17, 2009

Agri Stocks and Bio-Valley

1. With world economy going for a toss and Indian economy performing not as expected, stock market analysts are looking at rural customers as the light in the tunnel. The disposable income of rural India has been on uphill in the past decade. With agricultural sops in the interim budget, stocks of companies in agriculture sector have already started showing the movements (Read: Agri stocks rise on FM focus on agriculture). This article in business-standard also draws that in times of the prevailing uncertainty, it is better to invest in companies catering to the rural market. Detailed analysis of companies like Airtel, SBI, Jain Irrigation, Rallis, Hero Honda, HUL and Punjab Tractors are covered.

However, there is a catch: The improvement in the living standard of rural India has been mainly because of increase in price of agricultural commodities. Monsoon has also been very merciful. Falling commodity prices will definitely have an impact of rural incomes which will be seen after some time with a time lag. And let us pray that monsoon carry on with its mercy for Indian farmers who very much depend on it.

2. Well-known agriculture scientist Dr M S Swaminathan called for the creation of a Bio-Valley on the lines of the Silicon Valley to help India speed up the Second Green Revolution in order to remove hunger and increase the contribution of agriculture to GDP to over 25% and create huge agricultural employment. The proposed Bio-Valley should create a perfect balance between organic farming and green agriculture in an absolutely integrated manner in which genetically modified (GM) crops should be discouraged in a proportionate manner.